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Job-Order

Job-Order. Costing. (Part 1). Cost. Page 1. Determining unit costs … HOW MUCH DOES IT COST?. Why would a manager want to know unit costs? … to learn if making money … Revenue – Cost = Profit. On what financial statements do unit costs appear? Income Statement Balance Sheet

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Job-Order

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  1. Job-Order Costing (Part 1) Cost Page 1

  2. Determining unit costs … HOW MUCH DOES IT COST? Why would a manager want to know unit costs? … to learn if making money … Revenue – Cost = Profit • On what financial statements do unit costs appear? • Income Statement • Balance Sheet • Statement of Cash Flows Page 2

  3. MATCHING PRINCIPLE = match revenues with expenses It matches better than the variable costing income statement format. Page 3

  4. Rev - COGS GM - S&A NI Inv: (DM, DL, VOH, FOH) Rev - VC CM - FC NI Inv:(DM, DL, VOH) Page 4

  5. ABC Costing Process Costing Job-Order Costing distinct products homogeneous products e.g., house construction oil wells shipbuilding PC mfg. (e.g., Dell) e.g., bricks soda paint oil refining Job $ / # units = cost per unit Dept. $ / # units = cost per unit Page 5

  6. Have students do this on their own. All of these costs benefit multiple periods and should be spread throughout the year. This illustrates why MOH is allocated. Page 6

  7. Estimated MOH Estimated Activity Actual Activity × PDOR Over- and under-allocated overhead is closed to COGS if immaterial, is closed to EI of WIP, FG and COGS if material Page 7

  8. Page 8

  9. Cost Job-Order Costing (Part 1) • IN CLASS: • Halo Products Company • EXTRA: • Narcissus Needles • McKay Mills • Buffalo Broilers Page 9

  10. Job-Order Costing (Part 2) Cost Page 10

  11. Normal Costing differs from Actual Costing on only one count: Actual DM and DL transferred to WIP, but MOH is allocated to WIP

  12. Cost Job-Order Costing (Part 2) • IN CLASS: • Plentiful Printing • EXTRA: • Polaris Company • DM issued to DM and IDM issued to MOH!! • The Swizzle Manufacturing Company Page 13

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